Industrial production up more than expected
Output rises 0.5% in July, supporting optimism about recovery.
WASHINGTON (Reuters) -- U.S. industrial production rose more than expected in July, Federal Reserve data showed Friday, supporting hopes the longest recession since the 1930s was finally drawing to a close.
Aside from a hurricane-related rebound in October 2008, this was the first monthly increase since December 2007, which marked the start of the current recession.
Industrial production rose 0.5%, stronger than the 0.3% that economists polled by Reuters had expected and well above June's 0.4% decline.
Manufacturing output rose 1% in July, mostly because of a jump in motor vehicle assemblies which rose to an annual rate of 5.9 million units in July from 4.1 million in June.
Auto sales got a big boost from the government's "cash for clunkers" program, which provides incentives to buy new cars. The program's initial $1 billion funding was exhausted in its first week, and it has since been expanded to $3 billion.
Excluding motor vehicles and parts, industrial output fell 0.1% in July.
The capacity utilization rate, a measure of slack in the economy, edged up to 68.5%, slightly higher than economists had expected but still 12.4 percentage points below the 1972-to-2008 average.
The output of utilities fell 2.4%, reflecting unseasonably mild temperatures in July, while mining output rose 0.8%. 
